Shares suffer second week of battering

The Australian sharemarket has suffered its second straight week of losses with information technology and financial stocks hardest hit following weak offshore leads and worries about escalating tensions in the Middle East and Ukraine.

But opinion remains divided as to whether a further sell off is on the cards.

Since the financial crisis, the Australian sharemarket has surged about 75 per cent. Record low borrowing costs and three years of central bank stimulus have also helped the main US sharemarket rise 184 per cent to record highs. But for a bull market it hasn’t had a lot of believers.

Trading volumes have been thin and many investors are still worried about global growth and whether a potential shockwave could turn into a tsunami.

Geopolitical concerns are on the rise and the US central bank has flagged October as the end date for its stimulus program.

Investors have taken note and have been adjusting portfolios, some in favour of lower quality, higher yielding bonds; others in companies not linked to economic performance.

The market has absorbed all of this and Australian shares are down about 2 per cent this month. A correction is seen to be at least 10 per cent so we are still some way of that.

But given that September and October are typically seen as the weakest-performing months of the year, then many fund managers believe that a further sell-off could well be on the horizon.